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Home renovations can bring a sizeable ROI

Posted on October 16, 2013 by Orkhan Raguimov in Real Estate

Linking home renovations to the returns on investment they bring

It is common knowledge that home renovations increase the value of a home that you might be thinking of selling. That is largely because a home that is renovated looks presentable and appealing to potential buyers. When a lot of people recognize your house as desirable, its demand increases and so does the price that it is listed at. A Canadian Home Renovation Survey suggests that renovations on your kitchen or bathroom can yield twice the amount of money that you put into the renovations. In most cases, if you renovate any of these areas to a tune of $10,000, you can expect the value of the home to go up by anywhere from $17,500 to $20,000.

Some common home renovations and their returns on investment

The survey also suggests that for every dollar that you invest in painting your house during the renovations, the return on this investment is usually $1.5-$2.00. If you take a look at the list below, you will see 20 of the most commonly carried out renovations and their expected returns on investment.

Bathroom renovation 75-100%
Kitchen renovation 75-100%
Interior painting 50-100%
Exterior painting 50-100%
Roof shingle replacement 50-80%
Furnace/heating system 50-80%
Basement renovation 50-75%
Recreation room addition 50-75%
Installing a fireplace 50-75%
Flooring 50-75%
Constructing a garage 50-75%
Window/door replacement 50-75%
Building a deck 50-75%
Central air conditioning 25-75%
Landscaping 25-50%
Interlocking paving 25-50%
Building a fence 25-50%
Asphalt paving 20-50%
Adding a swimming pool 10-40%
Installing a skylight 0-25%

Return on investment is dependent on a few other factors

One of these is home-renovationsthe property location and the quality of the workmanship on the renovations. If people do not like the neighborhood or the area that the house is located at, renovating it will do little to increase its value since not a lot of people will want the house anyway. The location is also looked at due to the proximity of a property to other amenities like schools, shopping centers and so on. It has been proven over and over again, and it is actually true, that poorly done renovations decrease the value of a home or property. Thus one has to ensure that any renovations done are not ill-conceived or poorly done.

The Value of Housing Characteristics report by the National Assocation of Realtors in the USA also points out a few more things that decrease the value of a property. Two of these are a basement laundry and an above-ground swimming pool.

Some guidelines to follow before renovating a home

One of these is going for renovations that are most likely going to produce a sizable return on investment. If you feel that something is not going to be worth it, it is always a good idea to leave it out. Another tip is to ensure that any renovations done resonate with the rest of the house and the homes that surround your home. When buyers think that a home is overdone or overbuilt, you are more likely not going to get the price you are looking to sell for.


4 comments

  1. Carter in Saskatoon on said:

    I often see sellers who are trying to “flip” but have invested a lot into areas of the home that just won’t bring a sizable return to them. The more these sellers and investors can be educated, the easier it becomes to work with them!

  2. Dennis & Kim Downey on said:

    An important part of the return on investment is to consider your starting point. If you are going from good to great it wont see as big an impact as if your going from something that really needs an upgrade to something great.

  3. John@OurDadCanFixIt on said:

    Nice blog. Thank you for sharing it. I agree with your points on how to get Return on Investment on Home Renovation.

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